The inaugural SME Confidence Index report from UAE’s RAKBANK unveils a thriving post-Covid-19 landscape, with SMEs showcasing robust growth and optimism.
The index offers a detailed analysis across key industries, including construction and manufacturing, transport, trading, public services, professional services, and consumer and retail services.
Two in three SMEs expressed a positive view of the future business environment in the country, according to the report by RAKBANK in collaboration with independent research company RFI Global.
The report’s overall confidence index for UAE SMEs stands at 61, based on RFI Global‘s analysis of UAE macroeconomic indicators and a survey of over 1,000 SMEs conducted between November and December 2023.
It also reveals SMEs’ growth is propelled by notable increases in revenue over the past two years, especially within key sectors such as construction and manufacturing, and public services.
“Small and medium enterprises are the backbone of every healthy economy, and this is especially true in the UAE, where SMEs make up 94 per cent of companies and contribute over 50 per cent to the country’s GDP,” says Raheel Ahmed, CEO at RAKBANK.
“That is why we centred this inaugural report around the SME sector, in line with our priority of supporting this flourishing segment through actionable insights to assist in their decision-making, towards greater business growth and success.”
Inside the report
The report paints a positive economic outlook for the UAE, forecasting non-oil GDP growth of over four per cent in 2024 and an overall GDP increase of 5.70 per cent this year. Notably, the RAKBANK SME Confidence Index highlights signs of recovery, including hotel occupancy rates approaching pre-pandemic levels, signaling a revival in the tourism sector.
However, it also acknowledges challenges facing SMEs, such as rising labour and operational costs, the imminent introduction of corporate tax, and financial constraints. Overcoming these obstacles requires continued support from financial institutions, complementing government initiatives.
Leveraging robust macroeconomic data and business sentiment analysis, the report highlights a buoyant business environment, particularly evidenced by the issuance of new business licences in Dubai. Despite challenges like oil price fluctuations, macroeconomic indicators indicate favourable conditions for SME growth.
SMEs are actively pursuing innovation and expansion, with a keen focus on launching new products/services and responding to customer demand. Banking support emerges as crucial, with high satisfaction levels among SMEs for tailored financial solutions.
Dhiraj Kunwar, MD business banking at RAKBANK, also added: “RAKBANK has a rich legacy of supporting SMEs, and the launch of our Index in partnership with RFI Global builds upon this legacy, as the UAE’s first SME-specific confidence survey. We trust that this report will bring genuine value to small and medium enterprises who are seeking out credible content and data points to align their business strategy.”
